July 18, 2018 / 8:45 AM / a month ago

Semiconductor bellwether ASML beats forecasts, sees momentum growing

AMSTERDAM (Reuters) - ASML Holding NV (ASML.AS), a supplier of equipment to the world’s biggest computer chipmakers, reported forecast-beating second-quarter results, boosted by a rise in orders for its newest machines and demand from logic and memory chip makers.

FILE PHOTO: An employee services a Twinscan machine at the ASML factory in Veldhoven January 17, 2013. REUTERS/Michael Kooren/File Photo

ASML, whose earnings are widely viewed as an indicator of the semiconductor industry’s health, said it expected an even stronger performance for the rest of this year and into the next. Its products play a decisive role in shrinking the size of chips so as to cram ever more circuits onto them.

The bullish outlook may assuage concerns that demand for memory chips is waning, or that U.S. tariffs on China are undermining customers’ confidence.

The Dutch company, which supplies the world’s top chipmakers, including Intel (INTC.O), Samsung (005930.KS), and TSMC (2330.TW), reported net income of 584 million euros ($680 million), up from 466 million euros a year earlier, as sales surged 30 percent to 2.74 billion euros.

Analysts polled by Reuters forecast sales at 2.56 billion euros and net income at 524 million euros.

“After an excellent first half of 2018, we expect the second half to be stronger, with improved profitability and continued growth from Q3 to Q4,” said CEO Peter Wennink in a statement. He added that he expected that trend to continue in 2019.

ASML shares, which had been up 18 percent this year at Tuesday’s close, rose 6.25 percent to 182.90 euros by 0833 GMT on Wednesday. The benchmark Philadelphia Semiconductor index and the S&P 500 Semiconductor and Semiconductor Equipment Index have both risen a little more than 8 percent year to date.

ASML has high visibility on its business, as chipmakers must plan carefully where its machines — which cost roughly 100 million euros each — are placed in semiconductor fabrication plants, many of them based in Taiwan.

The company said it had received net bookings worth 1.95 billion euros during the second quarter and forecast net sales of 2.7-2.8 billion euros for the third quarter.

Discussing demand, Wennink said the company shipped one more of its newest, most expensive machines, during the quarter than it had expected.

Customers making logic chips, used to power the brains of computers, smartphones and tablets, are preparing “for the ramp of next...(generation) devices starting later this year,” he said.

ASML repeated its forecast that it will sell 20 of the newest machines this year and 30 more in 2019.

It said that memory chip makers, who buy marginally less advanced machines, continue “to require a significant number of lithography systems at least throughout this year and into 2019.”

Wennink said demand from logic and memory chip makers seems to be in balance.

($1 = 0.8590 euros)

Reporting by Toby Sterling, Editing by Sherry Jacob-Phillips and Louise Heavens

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